Here at Courtesy Mortgage Company, I am getting a lot of questions about how to refinance a FHA investment property these days. I commonly hear that a customer bought their home a few years ago using an FHA loan and then moved out and now can’t refinance their home. I hear this at lease once a day. I am lucky in the fact that we here at Courtesy Mortgage are one of the few companies that can offer FHA investment property streamlines refinances in California. Read the rest of this entry →
June 14, 2013 in Refinance
With recent increases in property values throughout California, we are seeing many scenarios where a prior low down payment purchase (3-5%) is able to refinance into a Fannie Mae or Freddie Mac loan to remove or reduce the monthly mortgage insurance.
Exisitng 30 Year FHA loans with case numbers assigned before June 3, 2013 require mandatory mortgage insurance for 60 payments and balance must reach 78% of initial appraisal/purchase price (whichever is lower). This can result in 9-11 years period of monthly installments.
By refinancing into a Conventional loan, the insurance can be removed (if able to close at 80% or less of new appraisal). If the value increase is not as sharp, refinance at 85% or 90% of current value can still be worthwhile. With conventional loan mortgage insurance, the monthly insurance payment rate is often much lower than the FHA rate. The removal is also potentially much quicker, and can also occur with reappraisal.
If you have an existing FHA loan and your market value has increased since the loan was obtained, this is an excellent time to explore your options to lower your payment by reducing rate and removing/reducing the insurance component.
HARP 2.0 (New Servicer Version) became available in March 2012 and has helped quite a few homeowners lower their payments or shorten their loan terms. When the program began there were many applicants waiting patiently for the opportunity and as a result a backlog ensued.
A combination of the demand for the product and lender unfamiliarity with the guidelines and procedures resulted in many transactions taking 3-6 months. Wait times for consumers applying directly at the Same Servicer “Big Bank” were even longer.
At this point, a good portion of the eligible pool of borrowers have successfully completed their transaction. Many lenders have loosened up their guidelines and are accepting higher Loan to Value and lower credit score than in the past.
Wait times for initial underwriting have decreased drastically, previously it could take 30-45 days, now the wait time are only 1-2 days. Recently Courtesy Mortgage has been able to complete HARP refinance loans in the minimum number of days allowed by TILA rules (7 days from loan application submission).
If you have a HARP eligible loan and have not yet completed your refinance, or if you have tried unsuccessfully for any reason, this is a great time to revisit your options.
A few weeks ago Freddie Mac loosened their decision criteria significantly for the Open Access version of HARP 2. Previoulsy it was a struggle to approve many eligible borrowers, in particular for investment property or condo. Primary residence applicants could often only get approved for 20 year loan term or shorter. Read the rest of this entry →
The majority of HARP loans are eligible for appraisal waiver, however there are certain criteria that must be met to allow the execution of the waiver. Generally speaking it is advisable to complete your transaction with waiver as it eliminates any risk of an uncertain value, while at the same saving on the expense and inconvenience of having a full report done. Read the rest of this entry →